March 19, 2005
IBM sues over Accenture contract

In addition to filing a complaint over the way that the Texas Health and Human Services Commission awarded its call center contract to Accenture, IBM has now filed a lawsuit against the state of Texas, claiming that there was a conflict of interest as well.

The lawsuit follows a formal protest IBM filed with the commission earlier this month that touches on conflict-of-interest allegations the state is already investigating.

Gary Gumbert, the agency's chief information officer, worked for Accenture subcontractor Maximus before being hired by the commission in January 2004, according to the lawsuit.

IBM officials were concerned about Gumbert's affiliations but were assured he would not play a critical role in the contract process, the lawsuit states.

But IBM officials, in the lawsuit, allege Gumbert was overtly biased in favor of Accenture, and that he was receiving retirement payments from Maximus during the contract process.

In February, Health and Human Services Executive Commissioner Albert Hawkins asked for a review of the evaluation process.

"Obviously this is a contract that is very large in size and scope," Harris said Friday. "The commissioner does want someone not involved in the process itself to review the process and ensure there is public confidence in any decision we make."

Speaking of conflicts of interest, Father John has another example.

The company in Colorado that designed their ill-fated computer program (CBMS) will ring a bell for those in HHSC in Texas -- it's EDS (Electronic Data Systems), which was the original contractor for the first phases of the TIERS system here in Texas (and has it's hands in other aspects of HHSC). Well now the Governor of Colorado wants a consulting firm to conduct an "independent review" of what went wrong with CBMS, and so whom does he choose? Deloitte & Touche...the same company that has the current TIERS contract in Texas.

Deloitte out to know a lot about computer systems that cost hundreds of millions and don't work worth a hoot in hell, because they designed the one we have in Texas. The only thing that has thus far prevented Texas from experiencing the same disaster as Colorado is the fact that the State of Texas has kept TIERS in a pilot phase for years beyond the date that the whole system was supposed to have been rolled out to the whole state. It is very curious how three corporations keep turning up with their fingers in the government pie: EDS, Deloitte, and Accenture.

I suppose this shouldn't be too surprising, since there really are only a handful of companies that can provide this kind of work. Once again, though, I consider that a powerful argument against this kind of privatization. You're really not getting a "free market" solution, you're getting essentially an oligopoly-market solution, and the incessantly incestuous cross-breeding that goes on in it is a kickback scandal waiting to happen.

Did I say waiting to happen? That wait may be over.

State officials are investigating whether current or former state employees profited from a nearly $1 billion Health and Human Services Commission contract to the Bermuda-based company Accenture.


In the past two years, the Health and Human Services Commission has embarked on a massive effort to consolidate the agencies under it and privatize many of the services it delivers to needy Texans. Accenture last month was tentatively awarded a contract to privatize the call centers where Texans apply for services like Medicaid and the Children's Health Insurance Program.

News of the investigation comes amid evidence of a "revolving door" involving at least two high-ranking state employees who had dealings with the privatization at Health and Human Services and have since left their state jobs to work for Accenture or one of its subcontractors.

Hazel Baylor, who until last year was the agency's deputy commissioner for planning, evaluation and project management, was later hired by Accenture to work on the state bid, Soh, of Accenture, said Wednesday.

Baylor could not be reached for comment.

Gregg Phillips, who was the No. 2 official at the state agency until last year and was a key figure in the plan to privatize many agency services, now does work for Deloitte Consulting in Dallas, which subcontracts for Accenture. He did not return a call left at his Dallas office.

Yes, it's our old buddy Gregg Phillips. You just knew he wasn't gone forever, right?

May I suggest, by the way, that this may be part of the reason why this sort of thing happens?

According to Sarah Woelk, director of advisory opinions for the state Ethics Commission, it is a Class A misdemeanor for state employees who work on a particular matter to join a private firm that's working on the same matter, and they could face civil fines.

A civil fine. Big stinking deal. Would that even erase the signing bonuses they surely got when they jumped ship to the private sector? You want to put a dent in this kind of graft, try making this kind of offense a felony, punishable by a year or two in the slammer and a lifetime prohibition against any dealings with state government.

Posted by Charles Kuffner on March 19, 2005 to Budget ballyhoo | TrackBack

Who are you kidding? The TIERS application is not what it could be. No doubt about that. But look to the State before you point fingers at Deloitte. Deloitte has implemented a number of very successful integrated eligibiltiy systems where clients provided clear requirements and really wanted to improve beyond legacy capabilities. Texas essentially wanted SAVERR presented nicely in a browser - in fact, demanded just that. Recall, requirements, or lack there of, were obtained by another vendor with no stake in the actual implementation. Given timeframes and hurdles, it is amazing Deloitte took TIERS to the level it has.

Also, the San Antonio paper got it wrong too. A Greg Phillips does work for Deloitte in Dallas. He is a low level Accountant. The guy you are looking for is working somewhere on the east coast...not for Deloitte.

Posted by: Jim Jones on March 20, 2005 11:02 PM

For years, the state has gone all in circles trying to decide how to do integrated enrollment. TIERS has had different acronyms to reflect changing scopes of function. The Legislature owns alot of the fault for that. And the state is not the most forward-thinking guy on the block when it comes to system design. So Jim's point is a good one - before we look to blame a contractor or the revolving door, we ought to first assess how much of the current situation is due to changing expectations and narrow thinking.

Posted by: hope on March 21, 2005 11:25 AM

All these consulting companies are not worth crap.
Less than 20% of the Deloitte consultants on the TIERS project were even half qualified to spell the words Java or Oracle.

Somehow they managed to elude the DHS folks for 4 years.

Posted by: Monkey on March 27, 2005 9:02 PM

It is amazing how Deloitte has managed to get paid for its staff who by any stretch of imagination do not meet the requirements in the TIERS RFP.

It is quite amazing how 21-26 year old Consultants can obtain 3-5 years of experience developing Java based welfare systems.

Someone ought to recoup the money from Deloitte for all of the non-qualified consultants.

Jimmy !! Looks like you are a Deloitte implant.

Posted by: Monkey on March 28, 2005 4:41 PM

Jim Jones wants the citizens of Texas to drink the purple kool-aide. How can the state be blamed when Deloitte can't make the software work? We have old software that works quite well, why can't they make a new version that works equally well... when they are getting 300 million dollars to do it?

Posted by: Fr. John Whiteford on July 1, 2005 11:16 PM

Want to see another Deloitte disaster? Try the CalWIN probject by Deloitte Consulting and EDS in California. $800 Million. The software doesn't work. See in the Daily Recorder folder. Two series: How Not To Buy Software and (ongoing) Public Officials and Taxpayer Dollars. Follow the links and watch the videos of Sacramento County, California workers complaining about the software.

Posted by: Richard Power on July 7, 2006 5:17 PM